From half-baked ideas to viable agribusiness

How do you separate subsistence consumption from business and family?

How do you separate subsistence consumption from business and family?

Charles Dhewa

Building a resilient agriculture-driven economy under a changing climate is about converting half-baked ideas into viable business models. Many Zimbabweans possess half-baked ideas whose value can only be realised if properly combined. By promoting entrepreneurship as a basis for agricultural innovation, agriculture markets provide a stable foundation for this important process. The market has a way of emphasising innovation as the only way one can survive. Agriculture is no longer for cry-babies always looking for someone to lean on.

People as the centre

of entrepreneurship

and innovation

Here we are talking about the characteristics of farmers, traders, transporters, consumers and other actors in agricultural value chains. What are the characteristics of farmers or traders? Would anyone be willing to be a farmer or a trader?

While looking at in-born traits, we have to try and understand farmers and traders who have been in business for at least five years. This period is long enough to provide clues on trends that reveal the essence of farming or trading. From this analysis, good case studies can be developed and used as learning tools.

This effort will address the current myth where it is assumed everyone can be a farmer or trader. Farming or trading is no longer something to do when other choices have failed. It has become a solid practice with strong communities of practice.

Through interacting with farmers and traders over many years, eMKambo has realised that these actors often find it very difficult to separate their businesses and family expenses. Farmers and traders are still to discover how to make their agribusinesses stand alone.

Critical questions to be answered by farmers and traders include: How do you allocate sales, particularly where you are assisted by family members like brothers and sisters? Under what circumstances do you end up using business money for family issues like funerals?

Business ethics and

customer relations

A number of farmers and traders understand this notion very well. That is why they use the Mbasela/Mbasera principle where a customer is given an extra portion of what s/he buys as a form of discount. The price remains the same but the customer is given extra towards relationship building. Every farmer or trader often has an extra bucket of commodities to cover up for Mbasela/Mbasera. For every farmer and trader, business is about building relationships and trust.

Critical questions to be answered by farmers and traders include: How do you ensure customer loyalty given that you are at the centre of the value chain where you have to meet the needs of super markets, farmers, vendors and individual consumers?

How do you relate with all these actors when you have not been formally trained? Obviously formal education is not enough under these circumstances.

Analysing the business environment

Here we focus on internal and external factors that often result in agribusinesses failing. A major question is: How do you ensure your agribusiness speaks to your environment (internal and external factors)? Internal factors are about you. These include interpersonal skills such as how you separate business from family as well as your business ethics. Once these are addressed we can then look at external factors.

You have control over internal factors. For instance, if your records were in shambles, you can start doing them well. You can also decide to start creating relationships with customers. All this can be done at very low cost.

External factors include understanding your competitors – learning from them as opposed to hating them. From their competitors, farmers can then look at demand and supply forces as a determinant of price.

Market forces often set the price, contrary to what many farmers believe. In cases where information is not clear, it may appear as if middlemen set the price.

How do you distinguish the role of the market and that of middlemen if you don’t visit the market and try to understand all dynamics? As a farmer, how do you make your product competitive in a very competitive environment? Part of the answer is about standards, packaging and consistency in supply. This is what will enable farmers or traders to survive in a competitive environment.

They don’t have control over external factors such as competition but they can take advantage of competition to become champions. Competition has its own benefits. Where there is no competition you don’t innovate. That means you can be caught unawares when somebody suddenly launches the same product as yours.

Reaching out to formal markets: Many times, farmers and traders fail to meet the requirements of formal markets in terms of standards. If you are going to start supplying hotels, what is your identity? Issues to do with grading, volumes and consistency in supply are very important.

Don’t just be an opportunist who can be blown in any direction following increases in price. A small increase in price for one commodity should not see you leaving what you were doing to focus on that commodity. Abiding by institutional policies such as 7-day or 21-day payments is critical because like any other business, your clients have to make money first before paying you.

Developing your business brand or image and business profile: In Mbare wholesale market, Mukanya is known for potatoes. He is not an opportunist. Choose a maximum of two or three products you will be known for. How do you profile your business?

Creditworthiness: How do you prepare yourself to work with banks and other financial institutions? There are basic things you need to do. You can keep simple records not with any bank in mind but to show some level of orderliness.

Creating networks: How do you create networks? Your stakeholders may not be your shareholders but have an interest in your business. How do you network with transporters, farmers, vendors, etc? Growth is about networking. To what extent do you utilise ICTs for networking?

What does all this add up to?

When all the above is done you will have produced a powerful document about your business. By structuring your business you control and drive the behaviour of your clients and stakeholders.

All this information can generate answers to questions like: How does someone generate a business idea from the informal market? How do you survive in a competitive environment?

How do you separate subsistence consumption from business and family? How do you build trust with the market? What are some of the consequences of inconsistent supply? Farming as a business courses that don’t link with a particular market miss the point. This is partly because informal learning is becoming more important than formal learning.

To what extent are calls for formalising the informal sector informed by solid evidence?

While formalising the informal sector is being touted as an important part of financial inclusion and economic revival, it is strange that such a move is not backed by grassroots evidence.

Thorough longitudinal research is important before rushing to formalise everything. We need long term thinkers as opposed to short-term strategists who are just focusing on quick harvests.

Formalisation is one issue which does not require half-baked ideas. Advantages of registration have to be clearly articulated by authorities to informal traders. Feedback from many farmers and traders suggest the informal market requires a different type of CR14. By elevating tax collection at the expense of business growth, current company registration and formalisation processes are not appropriate for the prevailing economic dynamics in Zimbabwe.

 

Charles Dhewa is a proactive knowledge management specialist and chief executive officer of Knowledge Transfer Africa (Pvt) (www.knowledgetransafrica.com) whose flagship eMKambo (www.emkambo.co.zw) has a presence in more than 20 agricultural markets in Zimbabwe. He can be contacted on: [email protected]; Mobile: +263 774 430 309 / 772 137 717/ 712 737 430.

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